The Financial Reporting Council (FRC) has launched an investigation into an audit of Thomas Cook’s financial statements for the year ending 30 September 2018.
The audit was carried out by EY. The investigation will be conducted by the FRC’s enforcement division under its audit enforcement procedure, the council said on Tuesday (1 October).
“The FRC will keep under close review both the scope of this investigation and the question of whether to open any other investigation in relation to Thomas Cook,” said the FRC.
It added it would liaise with other relevant regulators “to the fullest extent permissible” where necessary.
An EY spokesperson said: “We can confirm that EY has been notified of the FRC’s intention to conduct an investigation into the audit of Thomas Cook Group plc for the year ended 30 September 2018.
“We will be fully cooperating with FRC during their enquiries. It would be inappropriate to comment further at this time.”
The probe comes following a pledge by MPs to investigate management and executive pay at Thomas Cook in the run-up to the firm’s failure.
The House of Commons’ Business, Energy and Industrial Strategy Committee said the investigation would also look at the accounting practices and audits carried out by EY and PwC.
“This latest corporate failure has shone a light once again on the use of aggressive accounting methods to aid bumper payouts to company executives and the apparent inability of auditors and regulators to curb these practices,” said the committee’s chairman Rachel Reeves.
The government’s investigation will see Thomas Cook chief executive Peter Fankhauser called to give evidence, as well as COok’s finance director and chairman.